MnDOT Revenue Outlook Duane Leurquin Office of Finance Minnesota Department of Transportation Minnesota Transportation Alliance November 10, 2011

Agenda How state raises funds for highways How state funds are distributed to road systems How state revenue has changed in last 13 years End of Session (EOS) forecast Recent travel and tax trends Federal Outlook Debt Service and Fund Balance compared to Policy 2012-2013 Biennial Budget overview

State Highway User Taxes FY 2010 $ in millions GAS TAX $823.4 TAB FEES $531.6 MOTOR VEHICLE SALES TAX $216.7 TRUNK HIGHWAY FUND COUNTY STATE AID FUND MUNICIPAL STATE AID FUND 62% 29% 9% HIGHWAY USER TAX DISTRIBUTION FUND $1,577.3 5% SET-ASIDE

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Gas Tax 2011 EOS vs. 2010 Nov Gas tax up $21.6M (1.2%) from November forecast for FY12-13. Forecast assumes slightly higher consumption than prior forecast for FY11 – FY13. Reviewed Global Insights (GII), Energy Information Administration (EIA) consumption forecasts, and actual trends for guidance. The outlook for fuel consumption is affected by: the economy world oil prices longer term policy (CAFE standards) trends consumer trends toward more fuel efficient vehicles Trends can be offsetting.

Highway Consumption of Gas & Special Fuels History and Global Insight Forecast (Billions of Gallons, Annual Rate) 8

Vehicle Miles Traveled (VMT) and Motor Fuel Consumption All Minnesota Roads, 1975-2009

Registration Tax and Motor Vehicle Sales Tax (MVST) 2011 EOS vs Registration Tax and Motor Vehicle Sales Tax (MVST) 2011 EOS vs. 2010 Nov Registration taxes up $20.3 M (1.8%) from the November forecast for FY12-13. MVST is down $14.5 M (2.1%) for the same period. GII’s February 2011 national new car sales forecast increased from Nov. 12.0M to 12.3M in FY11, and from 13.9M to 14.1M in FY12.

Unit Sales of New Light Vehicles History and Global Insight Forecast (Millions of Units, Annual Rate) 13

Federal Highway Formula Funding Outlook Previous multiyear surface transportation law “SAFETEA-LU” expired in September 2009 Has been temporarily extended eight times since then through continuing resolutions Current extension expires March 31, 2012 MnDOT cash position 14

Debt Service Forecast 15

Fund Balance Forecast

Major Debt Service Risks Interest rates on uncommitted debt Revenue forecasts 17

2012-13 Biennial Budget overview Essentially, we received the budget changes we expected in the Trunk Highway Fund. Biennial State Road Construction appropriations: Increased and changed between years to utilize federal funding Increased for Better Roads for Minnesota, which required appropriations to utilize federal funding and existing fund balance and debt. Increased due to an additional rider that allows MnDOT to transfer up to $20 million for economic development in 2012. 18

Greater MN Transit A General Fund reduction occurred in the Transit Assistance fund - $2.7M total for the biennium. Motor vehicle sales tax on leased vehicles (MVLST) was $5M to the fund in FY11. This was forecast by MMB to be zero.

CY 2012-14 Contract Budgets CY 2012 total grant contracts (Federal, GF, MVST) at same total level as 2011 CY 2013 can be a 1% increase over 2012 CY 2014 can be a 2% increase over 2012 Any MVLST revenues or unused contingency will be programmed in succeeding years IF assumptions are true. Everything will be re-evaluated along the way.

Bienniums — Year by Year Amounts come out quite even year by year, especially when considering the MVLST isn’t available until the last day of the fiscal year. So the MVLST in received on the last day of 2011 helps make up for the lower other funding in 2011. The MVLST in 2013, if it truly comes in, will help with contracts in calendar year 2014. Millions

Minnesota Department of Transportation Questions? Duane Leurquin Office of Finance Minnesota Department of Transportation Duane.Leurquin@state.mn.us 651-366-3165 FY2011-3 22